The disappearing paper: Why cash is a dying payment method - The Next Web

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Coupla things:

1) Perhaps counterintuitively, a lack of cash can result in us spending more money. A University of Kansas study concluded that frictionless spending results in more frequent purchases, while consumers paying with cash are more focused on the cost, whereas those paying with plastic think more about the immediate benefit of the purchase.

2) Even more worryingly, a study by Dan Ariely, a Professor of Psychology and Behavioural Economics, found that transacting without cash makes us less honest.

Subjects in Ariely’s study had to report – honestly – how many maths questions they were able to solve from a test sheet, receiving a reward per correct answer. Those rewarded with tokens (which could be exchanged for cash) were twice as likely to lie about the number of questions they answered than those rewarded with hard currency.

Ariely concluded that although the tokens had an equal monetary value to the cash, subjects perceived a lesser value – and so were more likely to lie – because it was not actual money.

Ariely is the author of the books Predictably Irrational: The Hidden Forces That Shape Our Decisions, The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home and The Honest Truth About Dishonesty: How We Lie to Everyone - Especially Ourselves. When asked whether reading Predictably Irrational and understanding one's irrational behaviors could make a person's life worse (such as by defeating the benefits of a placebo), Ariely responded that there could be a short-term cost, but that there would also likely be long-term benefits, and that reading his book would not make a person worse off.[5]

In 2008 Ariely, along with his co-authors, Rebecca Waber, Ziv Carmon and Baba Shiv, was awarded an Ig Nobel Prize in medicine for their research demonstrating that "high-priced fake medicine is more effective than low-priced fake medicine."[6]